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ASTRAPAK RESULTS PRESENTATION FINANCIAL YEAR ENDED 28 FEBRUARY 2011 10 & 11 May 2011. DISCLAIMER. Forward looking statements
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ASTRAPAK RESULTS PRESENTATION FINANCIAL YEAR ENDED 28 FEBRUARY 2011 10 & 11 May 2011
DISCLAIMER Forward looking statements • This presentation might contain forward-looking statements that involve subjective judgment and analysis and are subject to significant uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to Astrapak. Forward-looking statements can generally be identified by the use of forward-looking words such as “may”, “will”, “expect”, “intend”, “plan”, “seeks”, “estimate”, “anticipate”, “believe”. “continue”, or similar words. • No representation, warranty or assurance (express or implied) is given or made in relation to any forward looking statement by any person (including Astrapak). In addition, no representation, warranty or assurance (express or implied) is given in relation to any underlying assumption or that any forward looking statements will be achieved. • Actual future events may vary materially from the forward looking statement and the assumptions on which the forward looking statements are based. Given these uncertainties, readers are cautioned not to place undue reliance on such forward looking statements. In particular, we caution you that these forward looking statements are based on management’s current economic predictions and assumptions and business and financial projections. Astrapak’s business is subject to uncertainties, risks and changes that may cause its actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. The factors that may affect Astrapak’s future performance are discussed each year in the annual report. • These forward looking statements speak only as of the date of this presentation, subject to any continuing obligations under applicable law or any relevant stock exchange listing rule. Astrapak disclaims any obligation or undertaking to publicly update or revise any of the forward looking statements in this presentation, whether as a result of new information, or any change in events conditions or circumstances on which any statement is based.
INTRODUCTION, STRATEGIC & BUSINESS REVIEW M Baglione
STRATEGIC REVIEW Strategy The Astrapak 10 Point plan: • Introduced in 2009; • Focused on: - Building core competencies; • Strengthening the business model; • Manufacturing science; • Model aimed at delivering improved and sustainable financial performance.
BUSINESS REVIEW Internal review: • What went wrong in 2011? • Poor execution of certain items in 10-point plan; • Poor cost management; • Change programme too ambitious for the team and culture in certain businesses; • Industrial action & retrenchments. • What corrective measures have been taken? • Senior management changes; • Structural changes; • Group Procurement & Group System Analyst appointed.
BUSINESS REVIEW External review: Which external factors impacted on the business ? • Difficult trading conditions throughout the year due to pressures on disposable income; • Major customers under severe pressure: branded versus in-house; • Tough trading conditions for customers delayed major projects already invested in by Astrapak – benefits will now only be realized in future periods whilst associated costs were incurred in current period by the Group; • Customer procurement strategies; • Significant increases in input pricing – issues above impacting severely on ability to pass on price increases timeously; • Competitor activities.
BUSINESS REVIEW External review: What steps are being taken in an attempt to combat or reduce the impact of such external factors? • Investment strategies being implemented to increase group exposure to non-branded and in-house products; • More scientific approach adopted to dealing with customers and customer procurement strategies; • Actively engaging with customers to implement strategies to increase customer market share; • Structural cost base changes & further cost extraction initiatives; • Energy Management Committee established and already adding value in energy utilisation strategies; • Group Procurement and Procurement Committees actively engaging with international supplier base.
FINANCIAL REVIEW M Diedloff
Financial Summary Main features of reported results: • Volume growth of 4.9%; • Continued downward pressure on margins due to trading environment; • Growing cost base mainly due to energy, labour and depreciation; • Raw material prices increases – more material in latter half of the year; • Industrial action and retrenchment costs of R 45 million; • Strong cash and treasury management resulting in lower net interest cost; • Gearing remains in 30% range; • Dividend unchanged at 26.4 cents per share - > distribution policy (21.8 cents – 21% above).
FINANCIAL PERFORMANCESUMMARY * Includes estimated R 35m loss due to industrial action and R 10m retrenchment costs
HEPS, Dividends & Yields Dividends & HEPS Dividend Yield & Share price
Gearing & Net working capital Gearing, Net Debt & Equity Net working capital & days
FINANCIAL PERFORMANCESUMMARY • Differential of R 55.8m mainly due to: • Add dividends of R 28.4m • - Strategic stockholding of R 23.6m
SEGMENTAL PERFORMANCE RIGIDS Factors impacting results: Challenges: Major customers under pressure resulting delays in capital projects and decline in anticipated volumes; Customer procurement strategies; Technology change at Weener-Plastop; PET operations underperformed. Positives: Continued growth in market share; Major projects awarded for 2012; Preferred supplier status.
SEGMENTAL PERFORMANCE FLEXIBLES Factors impacting results: Challenges: Historical re-investment rate; Poor strategic leadership; Culture change; Industrial relations. Positives: Leadership changes; Special investment of R 106m approved; Science in manufacturing.
OUTLOOK M Baglione
OUTLOOKTrading environment Challenges Polymer pricing ($) • Oil / polymer prices; • Energy cost increases : 25%+ per annum; • Labour costs and nationwide industrial action; • Change in interest rate cycle anticipated.
OUTLOOKA Strong platform for earnings growth • Market leading position in chosen industries; • Strong customer relationships with preferred supplier status; • Broad geographic footprint; • Strong technology platform; • Defensive business.
OUTLOOK MANAGEMENT FOCUS FOR 2012: • Execute on 10 point plan; • Maximise returns from Flexible special investment; • Delivery on delayed and newly awarded projects – Rigids; • Optimise cash: destocking & collections; • Restoration of gross margins; • Rationalise cost base – structural and other cost savings; • Improve return on equity.
